FTC and Law Enforcement Partners Continue Targeting Scammers of Spanish-Speakers
FTC News Release
May 17, 2005
Law Enforcement Actions
At the Miami event, the FTC announced the following law enforcement actions, including three new complaints (one with a proposed settlement), and one settlement of a previously filed action:
Del Sol, LLC
The FTC filed a complaint against California-based Del Sol, LLC, also doing business as Del Sol Educational, and its owner, Fernando Lopez Gonzalez, alleging that their telemarketing campaign targeted Spanish-speaking consumers and deceived them into paying hundreds of dollars for cheap merchandise with the promise of a valuable "prize," such as a laptop computer or digital video camera. According to the FTC, consumers who participate in the purported prize offer must spend approximately $213-$250 for merchandise, which defendants claim includes designer perfumes, name-brand watches, and music CDs. Instead of the promised brand-name goods and valuable prizes, consumers allegedly received cheap, knock-off merchandise and inexpensive electronic gadgets, and were unable to get refunds. The FTC filed its complaint in the US District Court for the Central District of California on April 25, 2005. That day, the court granted the FTC's request for a temporary restraining order halting the defendants' illegal business practices and freezing their assets.
The FTC received valuable assistance from the US Postal Inspection Service, the Arkansas Attorney General's Office, and the North Carolina Attorney General's Office in this matter. The states of Arkansas and North Carolina also have initiated separate actions against Del Sol. For more information, see the attached list highlighting the FTC's partners' actions.
The FTC is filing a complaint against Direct-Prom, Inc. and its principal, Ramiro Mailland, along with a proposed stipulated final order to settle charges that they deceptively advertised a purported "carb blocker" weight-loss supplement on Spanish-language radio and television stations. The defendants allegedly made false claims that their product, "ReduCarb," causes substantial weight loss in a short time and without any change in diet, and unsubstantiated claims that ReduCarb causes weight loss and works by blocking carbohydrates. The proposed stipulated final order would bar the defendants from making the challenged false claims for ReduCarb and similar weight-loss products in the future, and from making false or unsubstantiated claims for any product, service, or program. The order contains a $1.97 million suspended judgment, which would become immediately due if it is found that the defendants misrepresented their financial condition. Direct-Prom is currently in Chapter 7 bankruptcy proceedings, and the bankruptcy trustee will liquidate the business in accordance with Chapter 7 requirements. The complaint and stipulated final order are being filed in the US District Court for the Western District of Texas on May 17, 2005. The stipulated final order is subject to court approval.
The FTC announced that the defendants have agreed to settle the November 2004 complaint against Femina, Inc. and its owner, Husnain Mirza, alleging that they made misleading claims for "1-2-3 Reduce Fat," "Siluette [sic] Patch," and "Fat Seltzer Reduce" in Spanish-language advertising. The FTC later amended its complaint to include Ines Cinthya Karina Arroyo as a defendant. The settlement order permanently bars the defendants from making unsubstantiated claims that any product causes rapid, substantial weight loss in all users; causes rapid, substantial weight loss without the need to diet or exercise; reduces or eliminates body fat; reduces or eliminates cellulite; or controls metabolism. The settlement order contains a suspended $43,000 judgment, which will immediately become due if it is found that the defendants misrepresented their financial situation. The stipulated final order was filed in the US District Court for the Southern District of Florida on May 13, 2005, and requires court approval.
The FTC charged National Vending Consultants, Inc., Success Vending Group, Inc., and several related defendants with deceptively marketing vending machine business opportunities Ð with many marketing efforts specifically targeting Spanish-speaking consumers. According to the FTC complaint, the defendants allegedly claimed that the vending machines would yield "a 700% - 2000% Return on Investment!," and that for a $9,995 investment, the vending machines would generate earnings of $700-$900 per week. The FTC also alleged that the defendants paid imposters to pose as successful vending machine owners. Numerous buyers who relied on the scam lost money. The FTC alleged that the defendants violated the FTC Act and the Franchise Rule by making deceptive earnings claims, lying about references to current customers, and failing to provide accurate and complete disclosure documents.
The FTC filed its complaint in the US District Court for the District of Nevada on February 7, 2005. On February 8, the court issued a temporary restraining order halting the defendants' allegedly illegal business practices, freezing their assets, and appointing a receiver to take over the business. On April 27, the court entered a preliminary injunction upholding the conditions of the temporary restraining order, and specifically prohibiting defendants from making misrepresentations regarding earnings potential, the availability of locations for the vending machines, the authenticity of references, and the timely delivery of the the machines.
The Commission vote in each case was 5-0.
- Federal Trade Commission v. Direct-Prom, Inc., and Ramiro Mailland . Case No. EP05CA0186. FTC File No. 42-3049.
Federal Trade Commission v. Femina, Inc., Husnain Mirza, and Ines Cinthya Karina Arroyo.
United States District Court, Southern District of Florida, Civil Action No. 04-61467-CIV. FTC File No. X05-0008.
- Federal Trade Commission v. Del Sol, LLC, et al . United States District Court, Central District of California, Civil Action No. CV-05-3013-GAF. FTC File No. 52-3020.
- Federal Trade Commission v. National Vending Consultants, Inc., et al . Civil Action No. CV-S-05-0160-RCJ-PAL. FTC File No. X000039.
This page was posted on September 6, 2005.